Consumer Proposal

consumer proposal


A consumer proposal is a formal legally binding deal that you make with your creditors.


Let’s pretend you are deeply in debt. You can’t take out a bank loan, but you do have some stable source of income. Technically, you can make those payments to the dreaded creditors, but over a designated period of time.

If you have more than $5,000.00, but less than $250,000.00 in debt (excluding mortgage payments), you can qualify for what’s called a consumer proposal. If you’re filing jointly, you and your spouse must have a combined debt of less than $500,000.00. You also cannot have any previous proposals open. Even if you filed bankruptcy previously, you can qualify. In order to take advantage of this option, you must first contact a licensed trustee in bankruptcies, who will proceed to give you an assessment. The trustee will evaluate your debts, assets, income, family situation, and expenses. Once all that valuable information is gathered, it will be determined if this is the right solution for you. If not, the trustee may suggest a debt consolidation loan, credit counseling, a debt management plan, or personal bankruptcy.

Let’s say you are a viable candidate. Your beloved trustee will devise a plan, calculating how many months it should take to pay your creditors and the amount you pay per month. Then you must submit a claim to the creditors.

Now, the creditors may or may not accept your claim. Sometimes they’ll accept it, but only under certain terms. The trustee will guide you through this process, warning you if the creditors ask for any unusual terms. You must beware of the fine print. Sometimes the creditors will only send you proof that they received the claim, while neglecting to accept or reject it. In the worst case scenario, they do nothing at all, neglecting to even send you a proof of claim. Nevertheless, under the Bankruptcy and Insolvency Act, the creditors have 45 days to come to a decision. Unfortunately, the trustee cannot vote on your behalf.

If there’s a 25% vote against your claim, your trustee is required to schedule a meeting of creditors. At this point, you will attend the meeting, which will determine if the majority (over 50%) of creditors can come to an agreement. Only two votes can be reached: acceptance or rejection.

Luckily, for the consumers, the creditors rarely ever reject their claims. After all, they’d rather get some money than nothing. In the best case scenario, the trustee can work out a deal, so that you only have to pay 50% of what you owe to these creditors. However, in a lot of cases, you may have to pay a greater amount.

Keep in mind that the proposal is to eliminate unsecured debt. Examples would be credit cards, personal loans, and incomes taxes. The proposals are not created to assist you with secured debt like mortgage payments and car loans. Please fill out free consultation form


Consumer proposal vs. Debt settlement

Consumer Proposals can be a viable option if you have more debt than you can handle and don’t want to go bankrupt but there are drawbacks to consumer proposal programs. The first drawback is that you actually have to make the payments. You’re allowed to defer on a maximum of two payments. Once you defer on three, your proposal will be annulled. “Three” is the deadly number. Therefore, do not agree to pay $600.00 per month, when you can only afford $500.00.

Another drawback is that you will have to be careful about how you will budget your money. For example, if you set aside that $600.00 for bills, you may want to set aside a certain amount for miscellaneous expenses. If you were permanently laid off from your job, you may be able to work out an agreement with your trustee, but you would have to speak up ahead of time. Don’t just miss out on your payments.

Another downside to a consumer proposal is that the trustee gets a monthly percentage of about 20%, based on the proposal. Therefore, you could end up paying 50% of the amount you owe on a monthly basis. Plus, even though your debts will be paid off, your negative credit rating will stay the same for the next three years. Therefore, if it took three years for your debt to get paid, your credit will be negative for a total of six years.

The last and potentially worst drawback of a Consumer proposal Canada is that if you get denied for your proposal, you are automatically put into bankruptcy. Not much room for comfort here.

Because of the consumer proposal downsides mentioned above, making a debt reduction would be a much better option, especially if you’re solvent. As long as you have over $10,000.00 in debt, you can qualify. These settlements are especially helpful to those with poor credit ratings. Unlike with consumer proposals, credit counselors, and bankruptcy, debt relief doesn’t create that scar on your credit report. As a matter of fact, under Canadian law, a debt settlement company is not required to report to any credit bureau.

For the first few months, you don’t even have to pay. Why? Because your creditors are much more willing to accept those lump sum payments after you don’t. A mentioned earlier, they’d rather get something than nothing. You may take advantage of this passage of time by building a debt settlement fund. This way you’ll be prepared when the monthly payments (which are normally 30 to 50 cents on the dollar) do come about.

Premier Debt Help Canada can help consumers that are considering a consumer proposal. We can give you a 100% free consultation to see what your best options are. When you take the time to contact Premier Debt Help Canada , you are under no obligation whatsoever. Let us take a look at your current situation and see if we can help to guide you down the best road possible Call 1-877-567-1023 or fill out our quick consultation form


List of Provinces & Territories where we offer debt settlement

  • Ontario


    Nova Scotia

    New Brunswick

    Northwest Territories

  • Manitoba

    British Columbia

    Prince Edward Island


  • Alberta

    Newfoundland and Labrador



About Us Canada